Insurance Review: Driving it home


Asking clients how their family would find £2,000 per month if catastrophe struck may highlight the importance of life cover

Life insurance is the most widely known and bought protection product, yet so many people are still without it. Recent research from Scottish Widows found 50 per cent of the UK’s mortgage holders have no life cover in place, meaning 8.2 million people are leaving themselves and their families financially exposed.

For those with a partner, children or someone that depends on them for help or income then a life insurance policy should be seriously considered. In times of trouble, it provides cash where none existed before. Life cover itself is pretty simple but it still comes with a range of options that enables it to be tailored to individual needs.

Insurance is taken out for a number of reasons. Firstly, the purpose of protecting a family’s main asset: their home. If death occurs, the mortgage can be paid off in full and the remaining spouse and children can continue to live in the property.

Secondly, as well as ensuring the house is fully paid for, the remaining spouse and children will need money for every day living expenses. Family protection, if taken, can provide a lump sum or regular income.

Often clients that have mortgage protection in place feel that, since the mortgage will be paid off if they die, no other kind of protection is needed. They could not be more wrong. As an old boss of mine used to say: “So the mortgage is paid off, now what are you going to eat? Bricks?”

When talking to clients, it is crucial to ask them questions that will make them realise they do not have enough protection in place for their family. For example:

  • If you died tonight how will your family survive financially?
  • How much income would they have next month?
  • Is it enough for them to survive?
  • Where is this income going to come from?

Questions like this should hopefully prompt them to re-assess their needs and the level of protection they currently have in place. But while people may be aware they need life cover, you will often hear excuses such as “I can’t afford the solution you are recommending” or “it’s not for me right now as I’m purchasing a new car so finances are tight”.

The answer to this is simple. If you cannot find a £25 monthly contribution to a contingency fund to guarantee cash for your family in the event of your death, how will your family find more than £2,000 per month if something happened to you?

Recent claims from the Association of British Insurers and Group Risk Development show that more than £5bn was paid last year in group and individual protection insurance claims: the equivalent of almost £14m a day.

The saying goes that in this life there are no certainties except for death and taxes. With this in mind, it is vital to ensure that everything you own – including your most valuable asset, your life – is protected.


Steve Berry is protection manager at Pink